Continuing Evolution of New Source Review

2010 Mid-Atlantic Environmental and Energy

Conference and Trade Show Camp Hill, PA

April 14, 2010

John Egan and Colin McCallAll4 Inc.

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Agenda Brief major new source review primer Case study example of current issues:

• Applicability analysis• Excluded emissions• Tracking against projections

PM2.5 and GHG meet major NSR Aggregation and offsets for non-

attainment

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Major NSR Permits

Major new source review (NSR) is the air permitting program for major new sources and major modifications.

Two different Major NSR programs:• Prevention of Significant Deterioration

(PSD) for sources in NAAQS attainment areas

• Non-attainment New Source Review (NNSR) for sources in NAAQS non-attainment areas

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NAAQS

Pollutant Averaging Time Primary Standard Secondary Standard

Particulate Matter PM10, 24 hr 150 g/m3 150 g/m3

Sulfur Dioxide (SO2) annual 80 g/m3 (0.03 ppm) ----

24 hr 365 g/m3 (0.14 ppm)

----

3 hr ---- 1,300 g/m3 (0.5 ppm)

--

Nitrogen Dioxide (NO2)

annual 100 g/m3 (0.053 ppm)

100 g/m3 (0.053 ppm)

Ozone (O3) 8 hr 0.075 ppm 0.075 ppm

Carbon Monoxide (CO)

8 hr 9 ppm (10 g/m3) ----

1 hr 35 ppm (40 g/m3) ----

Lead (Pb) 3-month rolling avg. 0.15 g/m3 ----

1 hr 100 ppb (new std form)

1 hr Coming Soon

PM2.5, annual 15 g/m3 15 g/m3 PM2.5, 24 hr 35 g/m3 35 g/m3

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NSR Major Modifications In order to trigger a major

modification under PSD or NNSR:• Facility must be an existing major source

and project must result in a significant emissions increase, or

• Project must be a major source Different major source thresholds

and significance levels under PSD and NNSR

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NSR Major Modifications Major modifications under both PSD and

NNSR can include:• New emissions units• Physical changes to existing emissions

units or to non-emissions units• Change in the method of operation of

existing emissions units (e.g., debottlenecking)

• Removal of previous permit restrictions• Use of fuels or raw materials that the unit

could not previously use

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Example – How Major NSR Works

The Project• Existing combination fuel boiler

Fires primarily wood and coal• Modification:

Increase steam rate (more power) Burn more wood (biomass) Install new over fire air system

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Considerations Use NSR Reform:

• Actual-to-projected actual calculations For this discussion assume:

• Historic decrease in coal use• Only five years of historic data available• No baseline adjustments required • Located in an attainment area• Able to avoid PSD for all pollutants• Focus on SO2 only

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SO2 Applicability Analysis Potential to emit (PTE) rate = 500 TPY (no

change) Baseline period selected is 2003/2004 Baseline actual emission (BAE) rate = 300

TPY Projected actual emission (PAE) rate = 325

TPY• PAE – BAE = 25 TPY (< 40 TPY PSD significance threshold for

SO2)

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SO2 Baseline/Future

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-20180

50

100

150

200

250

300

350

400

450

500

Baseline and Projected Future Actual SO2 Emissions 2003-2018

YEAR

Emis

sion

s (T

PY)

Baseline + 40 TPY

Baseline 300 TPY

Project Occurs 2008

Potential to Emit

Baseline Actual Emissions Projected Actual Emissions

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Excluded Emissions

§52.21(b)(41)(ii)(c) states that in determining PAE the source shall exclude emissions following the project that the unit could have accommodated during the baseline period and that are unrelated to the project, including demand growth.

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Excluded Emissions For example if PAE is 380 TPY:

PAE – BAE = 380 – 300 = 80 TPY If boiler operated at a rate that resulted in

30 tons of SO2 during May 2004, a reasonable argument may exist that the boiler could have accommodated 360 TPY during baseline period (i.e., 30 tons/month x 12 months)

Any increase in SO2 cannot be due to the project

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Excluded Emissions Applicability analysis per §52.21(a)(2)

and §52.21(b)(41)(ii)(c) definition of PAE:

Excluded emissions (EE) = CHA – BAE360 – 300 = 60 TPY

Project increase = PAE – EE – BAE380 – 60 – 300 = 20 TPY

Currently a controversial topic with U.S. EPA

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Excluded Emissions Do they matter?

• In first case project increase was less than significant regardless of CHA emissions

• In second case CHA made project not significant

• Also if the project involved other units that emit SO2 they could affect applicability analysis and/or future reporting

Note that the rule says “shall exclude”

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Permit Language Requirement to monitor, calculate, and

record annual boiler SO2 emission rate for 10 years following project due to:• Applicability approach• Increased steaming capacity • Reasonable possibility of significant increase per

§52.21(r) due to 25 TPY increase not counting excluded emissions

Requirement to submit report if annual emissions exceed BAE by a significant amount and differ from documented projection

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Future Tracked Emissions 2009, 2010, 2011 annual SO2 emission

rate is less than BAE + 40 TPY: • No report required

In 2011 scarcity of biomass results in greater coal use and annual emissions exceed preconstruction projection

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Future Tracked Emissions

2009 2010 2011 20120

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100

150

200

250

300

350

400

450

500

Projected Actual and Actual SO2 Emissions 2009-2012

Projected Actual

Actual

YEAR

Emis

sion

s (T

PY)

Potential to Emit

Baseline + 40 TPY

Baseline 300 TPY

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Future Tracked Emissions By 2012 increased coal use results in

annual emissions exceeding both the BAE + 40 TPY and preconstruction projection:• Report required• Justification that emissions are within the

scope of the project• Possibly use excludable emissions from

baseline period to support

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Other Thoughts What if in 2012 we decide to fire TDF

instead of more coal?• Likely considered a modification if not

allowed in permit• New applicability analysis required• Baseline may need to change• CHA emissions may be important• May not be excludable

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More Thoughts The more complicated the project the

greater the potential for confusion and non-compliance. For example say the project required wood yard upgrades and netting for PM10:• Required to track PM10 for project and could

have units greater than and less than projections and not need to report

• What happens if one unit included in a multi-unit project isn’t changed?

• How does the next project get permitted?

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Final Project Thoughts What happens if actual emissions

exceed BAE + 40 TPY due to the project?

Maybe PTE isn’t so bad…

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PSD/NNSR for Fine Particulate (PM2.5)

Several unique PSD/NNSR issues:• Difficulty quantifying emissions• PSD air quality modeling challenges• NNSR applicability and offset

challenges Impacts to project viability, schedule,

and design

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Quantifying PM2.5 Emissions PSD/NNSR will require establishing

emission limits with a margin of compliance

Published emission factors not widely available, particularly for condensables

Vendor emission factors are often lacking

Test methods available but may not be appropriate in certain instances

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PM2.5 PSD Air Quality Modeling

Significant impact levels (SILs) not finalized

NAAQS demonstration will be difficult:• Adding facility-wide modeled

concentrations to nearby monitored concentrations

• Current background concentrations are above or near the 24-hour and annual NAAQS level already

24-hour concentrations could be temporally paired in certain situations

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PM2.5 NAAQS Considerations

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PM2.

5 24-

hour

Con

cent

ratio

n (

g/m

3 )

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NAAQS Level

Monitored Background Value

7 g/m3 available for modeling

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PM2.5 NNSR Applicability Challenges

Pennsylvania specific: 10-year deminimis aggregation

Projects with minor emission increases must be summed with other increases and decreases that occurred with a 10-year lookback

If a project triggers NNSR requirements, the clock is “reset” with respect to aggregation

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PM2.5 Deminimis Aggregation Example

Major facility with the following historic permitting activities:• New project (2 tpy)• 2007: New storage pile (1.3 tpy)• 2005: New boiler (2.4 tpy)• 2004: Boiler uptime improvement (3.5

tpy)• 2002: New outdoor vent (0.9 tpy)

Total of 10.1 tpy would need to be offset Same process applies to SO2 (40 tpy

threshold)

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PM2.5 Offset Challenges PM2.5 emission reduction credits (ERCs) are

in short supply Interpollutant trading will help ERCs are to be obtained from the same

nonattainment area of the project location, otherwise air quality modeling is required

Significant limits on the spatial separation between the sources generating the PM2.5 ERCs and the project location

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ERC Equivalency Demonstration

Project Location

ERC Location

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Finding PM2.5 ERCs

Direct PM2.5 ERCs are selling in PA for between $3,000 – $10,000 per ton with very limited sales of ERCs from which to judge

Determine the amount of ERCs needed early in their planning process

Begin looking for available ERCs as soon as possible

Internal reductions of PM2.5 should be given serious consideration

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New NAAQS Levels

1-Hour NO2 NAAQS: 100 ppb Extremely stringent for a 1-hour

averaging time standard. No proposed SIL, awaiting guidance.

Proposed 1-Hour SO2 NAAQS with similar issues as the NO2 NAAQS

No grandfathering of PSD permit applications that have not received final approval (even with draft permits)

Challenge for NAAQS demonstrations that correspond to Title V renewals

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New NAAQS Levels

Any major facility will have difficulty demonstrating compliance using facility-wide modeling

Strategic approaches to permitting: Look for emission reductions where they are

available (to either avoid major source permitting or to decrease modeled impacts)

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GHG Tailoring Rule

“Major Sources” of GHGs Regulated GHG pollutants PSD implications and timing

U.S. EPA will begin regulating GHGs for stationary sources in January 2011

No grandfathering for permit applications that have not been issued

Addressing GHGs in construction permit emissions inventories and control technology requirements (BACT, etc.)

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Conclusions

NSR applicability process is still evolving

Implications of new NAAQS are immediate and far reaching

GHGs can’t be ignored Environmental considerations will impact

planning and design Pay attention to these issues and try

not to be surprised

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Questions?John and Colin

All4 Inc.2393 Kimberton Road

P.O. Box 299Kimberton, PA 19442

610.933.5246 x14 and x20

www.all4inc.com

jegan@all4inc.com

cmccall@all4inc.com